1.As per the financial statement report of Bellamy’s Australia Limited, the business has a net loss of $809000 (Investors.bellamysorganic.com.au. 2018). The working capital needs of the business are still there but the company has managed to clear its debt as on 30th June 2017. The working capital of the business is provided by HSBC with an aggregate amount of $40 million along with a credit card facility of $250000 and a bank guarantee. The creditors figure has decreased from previous year and the company has at present secured creditors of $25259000. The trade payables and sundry creditors are shown together at $37726000. The company has a negative cash from operating activities which suggest that the company is facing problems in operational area of the business (Investors.bellamysorganic.com.au. 2018).
The rise in the costs of organic ingredients has also contributed to declining margins which have improved from last year. The company has brought significant changes in its operations by introducing a sales reset strategy and also followed a supply chain reset.
2.As per the financial report of Bellamy’s Australia Limited, there is no figure of goodwill as shown in the balance sheet (Investors.bellamysorganic.com.au. 2018). However the company has acquired some segmental assets in 2016. These acquisitions consist of $719000 in Australia, $25000 combined in China and Hong Kong and $8000 in East Asia. The cash and cash equivalent s shows a figure of $32,295,000 in balance sheet which was $32,035,000 in 2015. Hence it can be said that there is a slight rise in cash position of the company.
3.The profit and loss statement of Bellamy’s Australia Limited shows that the gross profit level of the business has fallen to $91521000 in 2017 from $101228000 in 2016 (Investors.bellamysorganic.com.au. 2018). Besides this the income statement also shows that the company has suffered a net loss of $809000 in 2017 while the same had a net income figure in 2016 of $38328000. The assets impairment loss of Bellamy’s is $424000 in 2017 in contrast to $36000 in 2016 (Investors.bellamysorganic.com.au. 2018). The company has also experienced a rise in administration and other costs as compared to thr figures of 2016. The organisation has been experiencing trading issues of its shares in the form of Certification and Accreditation Administration of the People’s Republic of China (CNCA). The reason for this is because the business license has been suspended to export milk formula from Melbourne plant. This has resulted in the stoppage of trading of shares of the organisation.
4.Based on the above discussion, it can be said that the financial condition of Bellamy’s Australia Limited has declined in the year 2017. The suspension of shares and trading halt has impacted adversely on the financial condition of the organisation. Due to all such aspects, the organisation has to incur main losses in 2017 (Legg 2017). In this condition, it is suggested to the clients to sell the shares of Bellamy’s Australia Limited.
Introduction
The main purpose of this assignment is to state the importance of continuous disclosures in order to make a strong and efficient market in Australia. The main function of the continuous disclosure regime is to provide the market with all information which can affect investment decisions and shareholder’s ability to rely on such information. The current investigation related to Newcrest about the violation of the continuous disclosure obligations has been a beneficial lesson for the listed firms, while the reporting season continues.
The Australian Securities and Investment Commission (ASIC) have introduced various disclosure practices and Newcrest which had violated the continous disclosure principle are making effort in regaining its brand image should have prompted the other public firms to have an effectual view at their own measures of compliance (Lewis, K., 2015). Hence, the current report intends to provide brief description of the need of continuous reporting regime for disclosure firms and its efficiency.
Literature Review
The current disclosure regime was introduced in 1994 and Chapter 6CA Corporations Act” and “ASX Listing Rules (Chapter 3) are involved mainly in regulating this regime. Section 674 provides that the company must provide information to the investors in the report which is not available but has a material impact on the prices of the security and value of security. In addition, Listing Rule 3.1 states that the company needs to disclose market-sensitive information, as soon as it becomes aware and enable clarification of the above-mentioned application (Chapple and Truong 2015).
With the help of continuous disclosure, information misrepresentation can be reduced between managers and investors. In addition, it is used to gauge corporate governance which is re-enforces Principle 5 in ASX Corporate Governance Principles and Recommendations. Numerous alternatives of enforcement are available in ASIC for a business which does not follow the continuous reporting regime. These alternatives include enforceable undertakings, criminal penalty proceedings and civil penalty proceedings with a maximum penalty of $1,000,000 (Ramsay 2015).
The compliance with infringement notice does not restrict ASIC in adopting civil penalty proceedings against those involved with breach and the obligations of the third parties are not influenced. As a result, this conduct has negative impact. Despite rapid handling of such infringement notices, the large firms might view these notices as a cheap and simple way with minimal impact on reputation (Chapple, Prasad and Xiong 2016). Thus the compliance of the new regime is very important for every business as well as the investors.
Continuous Disclosure Principle
The principles of continuous disclosure regime in Australia, which are discussed in details below:
Selective Disclosures
The focus of ASIC investigation into Newcrest is that whether the company reveals its position to the analysts before the company released market update which declared significant write offs and showed a decline in the production. Selective disclosures are closely related with insider trading. It is true that the market relies of the flow of information but not at the cost of such inefficiency (Lattin, Lam and Hunt 2017). Henceforth, selective disclosure skews the analysts’ loyalty, limits the investors to collect identical admission to information, hampers confidence and minimises transparency. Thus it is proven that selective disclosure creates trouble for the organisations. In such a situation the analyst’s rights are used as a tool for obtaining favourable reviews. The analysts should be aware that such rights can be withdrawn if they do not use such in an appropriate manner. In other situations investors might use their financial power to get preferential treatment from the private companies in exchange of information.
However, the abolition of selective briefings would be a good idea. They perform an important role by filling the gaps, which the analysts might misuse in the normal course of the enquiries. In most of the cases this is relevant as the investors are the one who seek such advantages from the analysts of the business. The relevant documents publication in the website of the company might help to reduce such an issue. The current step which is taken by ASIC of surveillance is a crucial aspect of the new disclosure regime.
The program of surveillance which is introduced by ASIC consists of spot checks of targeted organisations and reviewing compliance. The reason is the difficulties related to effective mounting in criminal prosecution along with the implications of ASIC costs of civil and criminal proceedings (Maroney 2015). The laws must be a combination of punishment and persuasion. The drive of ASIC to the analysts’ briefings is taken into account in the form of third pillar, which is involvement. Hence, it has become evident increasingly that corporate governance could be reviewed in an effective fashion and it needs to be enhanced as well, if the regulators engaged in its procedures.
Conclusion
Thus from the above discussions it is clear that the new continuous regime which is introduced in Australia is very effective, however ASIC needs to balance the books in an innovative way. The different layers of the new regime which consist of enforcement, regulation and guidance are intended to deal with the offences in an effective manner. Moreover the abolishment of selective disclosure techniques will be an effective idea. Along with this, the introduction of the briefings’ surveillance initiative of ASIC is taken into account in the form of important evidence, which is planned on the part of the regulator. Hence it can be concluded that the regime of continuous disclosures is efficient for all organisations in disclosure purposes as the shareholders will be made available with all the relevant information which will be accurate and timely.
References
Chapple, L. and Truong, T.P., 2015. Continuous disclosure compliance: does corporate governance matter?. Accounting & Finance, 55(4), pp.965-988.
Chapple, L.J., Prasad, A. and Xiong, F., 2016. Financial reporting on social media (including Twitter)-reviewing the challenges.
Di Lernia, C., 2014. Empirical Research in Continuous Disclosure. Australian Accounting Review, 24(4), pp.402-405.
Investors.bellamysorganic.com.au. (2018). Investor Centre. [online] Available at: https://investors.bellamysorganic.com.au/Investors/?page=annual-reports [Accessed 16 Jan. 2018].
Lattin, A., Lam, Y. and Hunt, J., 2017. Identifying and managing emerging risks for directors and officers. Governance Directions, 69(5), p.302.
Legg, M., 2017. Class Actions, Litigation Funding and Access to Justice.
Lewis, K., 2015. ASX consults on changes to continuous disclosure guidance note. Governance Directions, 67(4), p.201.
Price, J., 2014. Continuous disclosure. Governance Directions, 66(1), p.6.
Ramsay, I., 2015. Enforcement of Continuous Disclosure Laws by the Australian Securities and Investments Commission.
Russell, M., 2015. Continuous disclosure and information asymmetry. Accounting Research Journal, 28(2), pp.195-224.
Russell, M., 2015. New information in continuous disclosure. Pacific Accounting Review, 27(2), pp.229-263.
White, R., 2017. The Australian brand. Food Australia, 69(3), p.3
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